BVI Airways said the impending extension of the runway at Terrence B Lettsome International Airport may pose a ‘serious threat’ to its viability, because the project would facilitate competition from large airlines that are based in the United States.
The British Virgin Islands government has been pushing for the runway extension, even as it pumped $7 million into the privately owned BVI Airways to commence service between the BVI and Miami.
BVI Airways, under current conditions, is the only carrier scheduled to operate direct to Miami.
That may change, however, when the runway project is completed.
The cash-strapped BVI Airways, in a press release this morning, indicated that any competition into the US market would be bad for the ‘combined investment’ it is making with the BVI government.
Premier Dr D Orlando Smith previously clarified that the $7 million his Government had provided for BVI Airways is a subsidy – not an investment per se.
But BVI Airways today used the term ‘combined investment’ again. It said: “The extended runway and the promise of luring large US-based airline carriers, would obviously pose a serious threat to BVI Airways business model and undermine our collective investment. This has been a material adverse development to overcome.”
Meanwhile, BVI Airways also described as ill-timed, an announcement Premier Smith made late last year that $155 million would possibly be invested in the runway extension project.
The airline suggested that such announcement has resulted in it having a tough time borrowing money, especially because lenders now think other airlines will enter the market if the airport project is completed.
“The government’s ill-timed announcement of the contract award to lengthen the runway at Beef Island at an estimated cost of $155 million made it much more difficult for BVI Airways to raise private funding,” the airline further said.
Although Premier Smith had announced the estimated cost of the runway project, he had not signed any contract for it to be undertaken.
Fahie shared similar view
This is not the first time that concern is being raised about the impact the proposed runway extension may have on BVI Airways.
Leader of the Opposition Andrew Fahie, in March this year, questioned the government’s reasoning, adding that the airport project will facilitate planes to compete with BVI Airways.
“If they take that stand that they are going ahead with the airport project, then it is directly competing with BVI Airways. The question that I would ask: Why did we spend that money with them (BVI Airways), given that we were going to expand the airport, because our aim has to be that we want the bigger airlines to come in when it’s expanded – the American Airlines, the JetBlue, the Spirit, the Delta – all of them to come in. And, like every other country, you have to subsidize them anyhow,” Fahie had told the House of Assembly.
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